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Robert P. Minz, IFS (Retd.),27 Nayatoli Lane,
National Level Monitor,Old Hazaribag Road,
And,Ranchi-834001,
Member Central Guarantee Council,N.R.E.G.AJharkhand,
Rural Development DepartmentPh:0651 2531566,
Ministry of Rural Development,M:9431632371,
Government of India,E-mail: rpminz@indiatimes.com,
Date: 17-3-08


To
The Secretary,
Ministry of Petroleum & Natural Gas,
Government of India,
"A" Wing, 2nd Floor, Shastri Bhawan,
Dr. Rajendra Prasad Road, New Delhi - 110 001,

Sub: Irregularity in the supply of petroleum products to retail outlets.

Sir,

M/s Cosy Corner Fuel Centre, a retail outlet of Hindustan Petroleum Corporation in Ranchi in Jharkhand State is being run by a tribal dealer since September 2006 and till September 2007 his losses had accumulated to nearly Rs.5 Lakhs. During this period the tribal dealer had discovered many loop-holes in the supply of petroleum products to retail outlets. Instead of plugging the loop-holes and stemming the losses the Executive Sales Officer of the oil company continued to harass the dealer in many ways and on 22nd February 2008 during his visit to the outlet he went so far as to suggest that the tribal dealer should hand over the retail outlet to some other dealer or to the company or he should also pay bribes to the Weights & Measures Department and implicitly to oil company officials as is being done by other dealers. This confirms my suspicion that there is definitely some grave irregularity in the supply of petroleum products that results in losses accruing to honest dealers who try to sell Q & Q (Quantity and Quality).

The volume of a petroleum product does not remain constant at all temperatures. At lower temperatures the volume shrinks, but expands at higher temperatures. In order to maintain the delivery of correct quantity (weight) the international practice is to correct the volume to a reference temperature i.e.15 deg centigrade. Thus the retail outlets abroad are billed at the Temperature Corrected volume at 15 deg Centigrade and not the actual volume at the temperature at which the product is loaded. However, the petroleum companies in India while only quoting the density at 15 deg. Centigrade do not make any Temperature Correction of the volume. Thus in warmer months less quantity of petroleum products is delivered to the retail outlets. The expanded excess remains with the depots and accumulates to large quantities that are clandestinely disposed off. The tribal dealer has cited at least two instances when agents have approached him for the supply of tanker load of petroleum products direct from a depot at upto Rs. 2/- per litre less than the normal supply rate and on credit complete with ‘duplicate challan’.  On the other hand the retail outlets whose underground tanks are at a lower temperature get a much-reduced volume than what they had paid for. For example, if 4000 litres of petrol are loaded at a depot at 390 C and unloaded into an underground tank of a retail outlet, which is at 290 C, there is a reduction in volume of 44 litres due to shrinkage caused by reduction in temperature of 100 C. To this may be added leakage or pilferage during transit. Thus the retail outlet may get about 50 litres less petrol. The oil company officials and the Weights & Measures Departments of States are fully aware of this situation knowing fully well that if the dealer tries to sell at Q & Q he is bound to suffer losses and in due course has to approach them--to keep his head above water--for making ‘adjustments’ in the dispensing units by paying bribes. Those dealers who do not ‘pay-up’ suffer huge losses and are ultimately forced to hand over the retail outlet to persons ‘selected’ by the company officials.

I feel that the matter is very serious and needs to be investigated by the Central Bureau of Investigation and the Vigilance Bureau of the Jharkhand State. Appropriate further action as deemed fit may please be taken.

Although the above is a specific instance pertaining to Jharkhand State the malaise may be more widespread and the racket may involve a huge volume of petroleum products being clandestinely diverted and sold by oil company officials. On the other hand the retail outlet dealers who receive less quantity pass on the shortages to the consumers. Ultimately it is the consumer who suffers by being shortchanged. In order to put a brake on such malpractices I would like to make the following suggestions, which the Ministry may consider: -

1.                  The issue of temperature compensation is regulated in the Australian Capital Territory (ACT) through the Fair Trading (Fuel Prices) (Amendment) Act 1999. The ACT legislation requires the volume of fuel in a regulated transfer to be measured as if the fuel were at 150 C. To comply with the legislation, local depots in Australia have installed temperature-compensating equipment at the gantry level. The Government of India may consider bringing similar legislation in India to ensure that constant quantity by weight is supplied to the retail outlets every time whatever be the ambient temperature at the depot at the time of loading.

2.                  Until such legislation is passed in India and until temperature compensating equipment is installed in the gantry of each depot the petroleum companies may be directed to load petroleum products at the depot as per calibrated ‘dip’ volume but the billing should be done as per the volume corrected to the reference temperature (150 C).

I am sure that if such healthy practices are adopted one very big loop-hole will be plugged and a level playing field for honest dealers will be created.

 

Yours faithfully,

 

National Level Monitor

Member Central Guarantee Council, NREGA

 

Copy forwarded with compliments to the Chief Vigilance Officer, Ministry of Petroleum and Natural Gas, Hindustan Petroleum Corporation Limited, 17, Jamshedji Tata Road, Mumbai-400020 for information and necessary action please.

Copy forwarded with compliments to Sri V.K.Sinha, Sr. Regional Manager, Hindustan Petroleum Corporation Ltd., Tatanagar Retail Regional Office, Near Star Talkies, P.O.Tatanagar, Jamshedpur-831002 for information.

 

National Level Monitor,

Member Central Guarantee Council, NREGA